Mixed Q1 earnings keep focus on Tennant stock

Tennant (TNC) has drawn fresh attention after Q1 results showed revenue up 2.7% year on year and earnings and EBITDA ahead of analyst expectations, but with the weakest full year guidance among water infrastructure peers.

At a share price of US$86.88, Tennant has seen momentum build, with a 30 day share price return of 7.63% and a 90 day share price return of 35.35%, contributing to an 18.25% one year total shareholder return.

If Tennant’s move has you thinking about what else is gaining attention, this could be a good moment to scan 34 power grid technology and infrastructure stocks for other potential infrastructure linked opportunities.

With Tennant trading at US$86.88 and sitting only about 5% below the average analyst price target, yet flagged with a sizeable intrinsic discount, it raises the question of whether the stock is still undervalued or if markets are already pricing in future growth.

Most Popular Narrative: 4% Overvalued

The most followed Tennant narrative pegs fair value at $83.75, slightly below the current $86.88 share price. This frames a modest valuation premium for investors to weigh.

Cost containment, pricing discipline, and supply chain/procurement initiatives are offsetting inflationary and tariff pressures, supporting Tennant's ability to maintain and potentially expand EBITDA margins even amidst macroeconomic uncertainty.

Want to see what is behind that margin story and fair value cut? The narrative leans heavily on future earnings power, changing profit mix, and tighter share count. The exact assumptions might surprise you.

Result: Fair Value of $83.75 (OVERVALUED)

However, shipment constraints and tariff related cost pressure, especially in North America and APAC, could still unsettle margins and undermine confidence in the current fair value story.

Another View: Cash Flow Points in a Different Direction

While the popular narrative sees Tennant as about 4% overvalued against an $83.75 fair value, the SWS DCF model presents a very different picture. On that cash flow based view, Tennant at $86.88 is trading about 48% below an estimated fair value of $167.78, which creates a wide gap for investors to weigh.

This kind of disconnect between earnings based and cash flow based valuations raises a simple question for you: which set of assumptions feels closer to how Tennant will actually perform over time, and how much of a margin of safety do you really need before you are comfortable acting on it?

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Tennant for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 44 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Next Steps

If this mix of risks and rewards feels finely balanced, now is the time to look through the data yourself and decide where you stand, starting with 2 key rewards and 4 important warning signs.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.